TFM Sunrise Update 5-7-21


Corn futures are higher this morning.  July made a new high at 7.28-3/4 on gains of 10 cents are up 55 cents for the week.  Dec was up as much as 10-1/4 cents to a new high of 6.35-3/4 while tacking on 72 cents.  Notably, the dollar has turned lower and is down for the week.  New money continues to pour into the market on concern about U.S. summer weather.  So far, the start of the U.S. 2021 planting season is favorable . USDA will release their May Supply and Demand report next Wednesday.  The trade looks for U.S. 2020/21 corn carryout to be near 1.275 bil bu vs USDA’s last 1.352 bil bu guess.  The trade also estimates Argentina’s corn crop near 47 mmt vs USDA’s 47 and Brazil at 103 vs USDA’s 109. One private group estimates the crop closer to 95 mmt.


Beans and bean oil made new highs overnight.  July beans advanced as much as 18-1/2 cents to 15.88.  That new contract high marks a 53-3/4 cent gain for the contract for the week.  Nov beans made a new high of 14.28-1/4, up 19-1/4 overnight and 88-1/2 cents this week.  The new crop contract on Thursday topped $14 per bushel for the first time in eight years, having surged 27% since the start of 2021.  That is the best performance for the contract during that period in nearly 50 years.  Chinese Ag futures for (September) settled up 114 yuan in soybeans (at U.S. $25.60), up 41 in Corn (at $11.00), up 53 in Soymeal (at $522), up 128 in Soyoil (at 62.75 cents), and up 160 in Palm Oil.  Malaysian palm oil prices were up 137 at 4,352 (basis July) at midsession, the biggest gains in 2 decades on supply worries.  USDA’s May Supply and Demand report is approaching.   The trade looks for U.S. 2020/21 soybean carryout to be near 118 mil bu vs USDA 120.  Trade also estimates Argentina soybean crop near 46.9 mmt vs USDA’s 47.5 and Brazil at 136 vs USDA’s 136.  According to data on the Brazilian Trade Ministry’s website:  April exports to China rose 19% year-over-year to 12.64 mil tons, the most in a single month for data going back to 1997.  Total soybean exports also hit a record in April, surpassing the previous high by 2.5 mil tons.


Winter wheat futures were firm overnight following a strong finish yesterday led by strides in the corn market.  July CBOT wheat was up as much as 11-3/4 cents to 7.65.  For the week, the actively traded contract rose as much as 34-3/4 cents.  July KC wheat was up to 7.39-1/4 on gains of 12-1/2 cents and 35-3/4 cents for the week.  July MPLS wheat futures surpassed the $8 level, rising 15-1/4 cents to a new high of 8.05-3/4.  For the week, the spring wheat contract has gained 42 cents.  Weekly U.S. export sales were negative and U.S. export prices are still at a premium to EU and Russia.  Wheat cannot afford to be cheaper than corn or World feed demand will increase over supply.  Statistics Canada is scheduled to release its estimates of Canadian crop stocks as of March 31, 2020, this morning at 7:30 a.m. CDT.   Next Wednesday, USDA May S&D numbers should show U.S. 2020/21 wheat carryout to be near 850 mil bu vs USDA’s last estimate of 852.  Trade estimates for the U.S. 2021 wheat crop is near 1.877 bil bu vs 1.826 last year.


Cattle futures are called mixed ahead of the weekend.  Live cattle finished higher for the second consecutive day as the market saw additional short covering and value buying.  June cattle may be trying to define a bottom, but deferred contracts are staying range bound and sideways.  While the price action the past two days has been friendlier, today’s session will give us a glimpse into next week’s tone.  Cash trade may be done for the week with the majority of trade was the $118-119 range, steady to $1 higher than last week, and at a premium to the June futures.  Beef demand stays strong, as Choice carcasses tick upwards by 1.59 to 306.37, and Select was 3.18 higher to 289.36.  Load count was light at 100 loads.


Hog calls are for steady to higher.  Futures were mostly higher on Thursday, with front months establishing new contract highs for the third consecutive day.  The direction in the hog market is still working higher, and the fundamentals stay supportive, but after a strong week, could be open to some position squaring.  The cash market has helped fuel the market, and the lean hog index gained .52 to 107.89, as the country side cash market still bids aggressively for hogs.  Weekly export sales stayed supportive as the USDA reported new sales last week of 48,200 MT, up 36% from last week. Mexico, China, and Japan were last week’s top buyers of U.S. pork.  Exports were also strong at 37,100 mt, down from last week’s market year high, but still a supportive number.  The pork carcass value pushed higher at the close, gaining 1.95 to 113.86 on moderate movement of 215 loads.  Pork carcasses have been trending slightly higher this week, and the product movement has been moderate.  Technically, prices are in a strong uptrend, and there are no signs of a top.


Matthew Strelow

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